Property tax delinquency rates are down in both San Diego and Riverside counties, because banks are paying back taxes on foreclosures, officials said.

As the economy began to sour in 2007 and unemployment rose, the percentage of property tax delinquents in both counties jumped. But the past two years have seen a steady increase in the percentage of people who were paying on time ---- mostly, tax officials said, because financial institutions have been taking over foreclosed properties and getting the taxes caught up...."The decrease in our tax delinquency rate is most likely due to financial institutions stepping up and paying in the instances where the property tax payer cannot, or is unfortunately under foreclosure action," [Don Kent, the Riverside County treasurer] said.

This makes sense because the late fees and interest rates are very high on unpaid property taxes, and the lender will end up paying them anyway in foreclosure (this saves paying the interest and late fees). If the homeowner is able to keep the home, the lender will charge the homeowner for the taxes paid. I was actually surprised the lenders weren't more proactive about unpaid property taxes, but maybe they were hoarding their cash last year.

A new twist on mortgage fraud is making already difficult short sales darn near impossible, say local real estate agents....In recent months, second lenders have begun to demand extra money in a side deal to get them to approve the short sale. And some don't want the seller to tell their first lender anything about it, real estate agents say ---- a condition that may constitute mortgage fraud by violating state and federal disclosure requirements.